The internet has undergone a remarkable transformation, evolving from a centralized information hub to a dynamic landscape of decentralized applications, cryptocurrencies, and smart contracts. Recent technological advancements have paved the way for this digital revolution, and now we stand on the cusp of Web 3 - a new era that promises to revolutionize online interactions, transactions, and trust. And at the core of this paradigm shift lies a ground-breaking concept known as Multi-Party Computation (MPC).
But what exactly is MPC, and why is it so vital for the progression of Web 3? MPC refers to a cryptographic technique that enables multiple participants to collaborate and execute computations while safeguarding the privacy of their individual inputs. In simpler terms, it allows collaboration without revealing sensitive information, paving the way for enhanced privacy, security, and decentralized decision-making. In essence, MPC enables secure computation of sensitive data while preserving privacy.
In the context of Web 3, where trust and privacy are paramount, MPC emerges as a game-changing solution. Traditional web applications often rely on centralized servers, meaning a single entity stores and processes the data. This centralized approach exposes information to potential vulnerabilities, as hackers can target a single point of failure. Moreover, it puts privacy at risk, leaving users with limited control over how their data is utilized.
MPC, on the other hand, redistributes trust and computational power across multiple entities. By harnessing sophisticated cryptographic techniques, MPC ensures that no single party can access or manipulate your private data without consent. In this article, we will delve into the ways in which MPC is poised to revolutionize Web3, bolstering security, fortifying privacy, and empowering individuals like never before.
In order to grasp the current state of Web3, it is crucial to reflect on the journey that has brought us to this point. Understanding the historical context will provide valuable insights into the evolution and significance of Web3 in the digital landscape.
The world has undergone remarkable transformations since the advent of the World Wide Web in 1991. However, the current internet landscape, known as Web2, is predominantly characterized by centralization, where data and power are concentrated in the hands of a few influential industry players. Unfortunately, recent global events have highlighted the risks associated with Web2, exposing individuals to the potential misuse of their personal data. In response to these challenges, the next generation of the internet, Web3, has emerged with a user-centric approach. Built upon a decentralized infrastructure, Web3 aims to restore data ownership and empower individuals.
Web3’s decentralized protocol enables individuals to connect to an internet where they can truly own and benefit from the data they contribute to large internet companies such as Google and Facebook. It promises a more secure and transparent environment for data storage and sharing. While the blockchain ecosystem has made significant strides towards this vision, true implementation of privacy protocols within Web3 is crucial to ensure individuals can enjoy the promised freedoms. This is where MPCs play a pivotal role.
The following sections will explore in greater detail how MPC within Web3 holds the key to realizing a decentralized internet that empowers individuals and safeguards their privacy. It will delve into the myriad of benefits and applications of MPC, showcasing its potential to reshape online experiences making way for a truly user-centric Web3.
The rise of Web3 platforms, built on blockchain technology, has led to the adoption of MPC to ensure data privacy while keeping sensitive information secure. This combination is a perfect match, as MPC aligns well with the principles of the blockchain ecosystem.
In 2020, digital asset security companies began using MPC to protect users' private wallets and keys, recognizing its potential for enhancing security. As the Web3 ecosystem continues to advance, more companies are adopting MPC to provide an even higher level of decentralized privacy for various uses.
The transition from Web2 to Web3 aims to enable collaboration on different datasets while respecting confidentiality and compliance. However, traditional blockchains are not designed to address these requirements. They are inherently public, and smart contracts are typically executed by one node and validated by others. MPC, on the other hand, distributes computation across a network of nodes, which truly embodies decentralization.
The guarantees offered by MPC have attracted the attention of prominent players like Coinbase, which recently unveiled its Web3 application capability. Coinbase's new wallet and decentralized application (DApp) features utilize MPC to safeguard the privacy of both senders and recipients while ensuring the accuracy of transactions. By implementing MPC, Coinbase aims to provide a secure and private environment for its users within the Web3 ecosystem.
Imagine a world where companies and organizations value your privacy and prioritize the security of your data. With MPC, that vision is becoming a reality in the Web3 ecosystem. More and more companies are embracing MPC, allowing users to have a say in how their data is used and who has access to it.
This integration of MPC is empowering. It means that your personal information remains confidential, even as you engage with Web3 platforms. Your data is no longer vulnerable to exploitation or misuse by centralized entities. Instead, it is protected through advanced cryptographic techniques that ensure one’s privacy is preserved. This shift puts one in the driver's seat, granting the freedom to explore the possibilities of the decentralized web while keeping data secure.
MPC is set to play a pivotal role as Web3 continues to evolve, according to experts in the industry. However, it is crucial for businesses to strategically combine various technologies to address real-world challenges while safeguarding data privacy effectively.
Implementing MPC protocols and underlying cryptographic components requires specialized knowledge that may not be readily accessible to everyone. This requirement for technical expertise poses a challenge for organizations aiming to develop and deploy secure solutions based on MPC. It's important to acknowledge that MPC solutions are not entirely without flaws. Nevertheless, by dividing a private key into multiple shares, the vulnerability of a single attack vector is eliminated. This has long been a concern for traditional private key wallet providers.
In an MPC-based system, rather than gaining access to a seed phrase or a single private key, a hacker would need to compromise multiple parties, each employing distinct security measures. This significantly increases the complexity and difficulty for potential attackers.
However, it's crucial to recognize that MPC alone cannot provide foolproof protection against skilled hackers. By combining MPC with other security measures, organizations can create robust defense mechanisms against potential threats. It's important to strike a balance between the enhanced security provided by MPC and the additional security required for high-value assets. And this exactly what Krayon does.
In reality, it's important to acknowledge that any system can be hacked given enough time and effort. While distributing the points of vulnerability and removing a single point of failure make attacks more complex, it's still possible for multiple points of failure to occur. This highlights the ongoing need for continuous development and improvement of technology to stay ahead in terms of security and privacy.
Nillion serves as an excellent example of adopting this approach. Nillion not only utilizes MPC to fragment and distribute data, but they also incorporate information-theoretic security (ITS) into their system. This means that even if several data storage points are compromised, ITS enhances the security of the data by altering its composition beyond cryptography before fragmenting and distributing it through the MPC process.
By changing the composition of the data, referred to as "particles," a potential hacker would need to locate each particle associated with specific data information if they wanted to breach the data. However, this task is inherently challenging because the combination of ITS and MPC ensures there is no identifiable trail connecting the nodes.
To simplify this explanation, imagine trying to find needles of a specific color in multiple haystacks. But here's the twist: the needles have been spray painted to conceal their original color before being distributed across different haystacks. In this scenario, you could search through all the haystacks and collect all the needles, but you wouldn't know which needles to assign a particular color because their composition was changed before distribution.
In this analogy, the ITS represents the alteration of color composition, and the MPC represents the distribution of needles to different haystacks rather than keeping them all in one place (which is similar to storing sensitive data in a centralized database or an open-source ledger).
The future of Web3 hinges on the industry's ability to leverage its unique features and meet market demands beyond what Web2 can offer. Decentralizing, distributing, and securing user data through protocols like MPC is one of the avenues that can drive this success.
Now that we understand what secure multi-party computation is and how it functions, let's explore the various ways MPC can be applied in Web3 to bolster security and protect against potential attacks and vulnerabilities.
Protecting Identity Wallets: In 2022, the world witnessed a significant rise in bridge hacks, with some of the largest ones occurring due to the compromise of owners’ keys. These keys are essential as they represent an individual's identity and credibility. If they are compromised, it could result in the loss, or, to be more accurate, theft of funds. MPC has the potential to safeguard owners’ protocols and bridges from being hacked through key compromises. One can effectively protect their investments by sharding the keys and dynamically reconstructing them through all parties' combined input. Even if one party is compromised, the blockchain transaction cannot be signed, ensuring security. This is why MPC is so much better than multi-sig solutions like Gnosis Safe.
Transaction Privacy and Confidentiality: The fundamental basis of blockchain technology is Distributed Ledger Technology (DLT) which ensures data integrity, authenticity, and authorization across all nodes and validators. However, there may be instances where a user requires the security and benefits of blockchain while keeping the data confidential rather than public on the database. Is there a solution to this? MPC offers one of the most effective solutions to address these challenges. Such transactions can be processed via MPC, allowing them to be offloaded from the blockchain. The transaction receipt can still be recorded on the blockchain, serving as proof of the transaction while maintaining confidentiality.
High-Value Transactions: Many protocols and arrangements necessitate the permission and involvement of multiple parties or signatures to execute a task, action, or transaction. MPC, which is primarily based on aggregating confidential data to produce a final result, is ideal for such scenarios. One can achieve this on the blockchain by gathering input from different parties and signing the transaction.
DLT and blockchain have been widely adopted over the past decade to scale data transmission efficiency. While the security of the data itself has been a focus, the growing realization among Web3 adopters is that data privacy cannot be compromised under certain circumstances, making it an essential aspect to address.
Fortunately, by leveraging MPC, the confidentiality of data can be upheld without the need to expose sensitive information like private keys. Fireblocks, a specialist in digital asset security, pioneered the use of MPC in digital asset custody, recognizing its potential for secure private key management.
MPC, has versatile applications for securing private data. An article by Qredo highlights some of these real-world use cases, demonstrating the depth of possibilities offered by MPC. Let's delve into a few examples:
Considering the mentioned applications, we merely scratch the surface of the vast practical uses of MPC and its ability to support robust user privacy. As Web3 continues to advance, the integration of MPC will play a crucial role in addressing users' privacy concerns. By harnessing the power of MPC, Web3 platforms can ensure the confidentiality of data without compromising security, thereby fostering trust and furthering the evolution of the decentralized web.
Krayon provides MPC-based wallets to everyone from startups to large corporations. If you’re looking for a secure wallet solution to safeguard your digital assets, then sign up now for a free account.
